A whistleblower who spent years working on the integrity of the Australian Government’s CO2 credit system has launched an extraordinary attack on the scheme, describing it as a fraud that harms the environment and has wasted more than £ 1bn. USD in taxpayer financing.
Prof Andrew Macintosh, the former head of the government’s Emissions Reduction Assurance Committee, said the growing CO2 market monitored by the government and Clean Energy Regulator was “largely a hoax” as most of the approved CO2 credits did not represented real or new reductions in greenhouse gas emissions.
His criticism – outlined in four new academic articles – has major consequences for the credibility of the coalition’s 4.5 billion. USD “direct action” emissions reduction fund, through which the government buys carbon credits from farmers and other businesses.
It also raises questions for the rapidly growing number of polluting companies that promise to buy CO2 credits to offset their impact on the planet. The private market for CO2 credits was DKK 150 million. USD worth last year.
Macintosh, a professor of environmental law and policy at the Australian National University, said all major government-approved methods of creating CO2 credits had “serious integrity issues, either in their design or the way they are administered”.
This was especially true of projects for the restoration of native forests in cleared areas. Known as “human-induced regeneration”, it is the most popular method used to create carbon credits. Landowners using the method have signed contracts with the government worth an estimated 1.5 billion.
Macintosh and his colleagues analyzed 119 man-made regeneration projects in New South Wales and Queensland. They found that despite the government issuing 17.5 million. CO2 credits for these projects – where each credit was to represent one tonne of carbon dioxide absorbed by growing trees – the total forest area had barely increased.
Questions and answers
What are carbon credits?
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Carbon credits are used by the government and polluting companies as an alternative to reducing carbon dioxide emissions.
Instead of reducing their own pollution, they can choose to buy CO2 credits that are intended to represent a reduction in emissions elsewhere.
Each carbon credit represents one tonne of carbon dioxide that has either been stopped from entering the atmosphere or sucked out of it.
Methods approved to generate carbon credits in Australia include regeneration of native forest that has been cleared, protection of a forest that would otherwise have been cleared (known as “avoided deforestation”) and collection and use of emissions that leaking from landfills to generate electricity.
Credits are purchased by the government through the $ 4.5 billion taxpayer-funded emission reduction scheme. or by polluters in the private market.
For 59 of the projects, it turned out that the amount of forest was reduced. They still received 8.2 million. CO2 credits worth more than $ 100 million
The researchers also found problems with projects at landfills that are given credits for capturing methane – a potent greenhouse gas released from waste – and using it to power on-site power generators.
Macintosh said nearly two-thirds of the alleged cuts in emissions would have happened anyway because the power projects were economically viable with no revenue from CO2 credits. This meant that the CO2 credits generated did not represent “further” reductions in emissions, as required by law.
“What is happening is fraud on the environment, fraud against taxpayers and fraud against ignorant consumers,” he said.
“People get credit for not clearing forests that would never be cleared, they get credits for growing trees that are already there, they get credits for cultivating forests in places that will never maintain permanent forests, and they get credits for the operation of electricity generators at large landfills that would have worked anyway. “
‘The public deserves an explanation’
Macintosh described himself as a “deep believer” in the ability of environmental markets to drive behavior change and improve environmental performance in a cost-effective way, but said the government needed to take immediate steps to make the carbon market worthwhile.
He called for the abolition of flawed methods, stopping low-integrity projects from receiving additional credits, and setting up an independent inquiry into the system’s flaws with the power to force people to testify.
“The public deserves an explanation of what has happened and what can be done to ensure that this does not happen again,” he said.
Macintosh said he believed the initial flaws in how carbon credits were issued were unintentional, but subsequently attempts had been made to cover those flaws. Recently, as the demand for credit increased with fossil fuel companies under pressure to show that they were tackling the climate crisis, he felt that the government had made a conscious decision to prioritize building a plentiful supply of cheap compensation rather than securing their integrity.
Macintosh said the flaws in the CO2 credit system were partly due to the fact that a single agency, the Clean Energy Regulator, was responsible for just about everything: the design and regulation of CO2 credit methods, the advisory and secretariat of the committee overseeing the integrity of methods and purchases of credits on behalf of the government.
“It’s a case study in bad governance,” he said.
The regulator rejected Macintosh’s claims, saying both it and the committee had undertaken significant work using independent experts to test claims made by Macintosh and found no evidence to support them.
“Analytical material previously provided by Professor Macintosh has been refuted by more sophisticated independent analysis,” a spokesman said.
The regulator said it had “well-established and rigorous processes” to deal with potential conflicts of interest that arose from developing CO2 credit methods and issuing and buying credits, and that the emissions reduction fund was a “robust compensation scheme with a high degree of integrity”.
It said that the issuance of CO2 credits was supported by “strict assessment processes” through geographic information system mapping and other “big data”, and that compliance was ensured through audits.
As for the original forest renewal method, it said a review had found “a very high” level of compliance. Legislation prevented it from releasing data from the specific forest areas that had been used to estimate the change in carbon storage due to regrowth, but they did not agree with Macintosh’s analysis.
Macintosh said there was nothing in the legislation that prevented the regulator from releasing the data aggregated across all project sites, or on a project-by-project basis with identifying information removed. He said the lack of transparency was a major problem with the system.
Questions and answers
What does Macintosh and his colleagues specifically claim?
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- Credits are routinely issued for tree growth that would have happened anyway. The method is based on the assumption that livestock grazing significantly reduces tree growth and forest cover, but scientific evidence shows that this is incorrect.
- Credits are issued for the cultivation of trees, despite the fact that in many cases they already contained mature trees when the projects started. The rules require that areas with mature trees be excluded.
- Landfill projects that receive CO2 credits to collect and burn methane to generate electricity are already profitable – they make money by selling the electricity and by receiving and selling renewable energy certificates – and should therefore not qualify. The Integrity Committee under Macintosh recommended in 2018 that these projects no longer receive credits. The government instead created a new method that gives landfill projects an extension of five years.
- Credits are issued based on a flawed assumption that any landowner in western NSW with a land clearance permit issued between 2005 and 2010 planned to use it within 15 years. This would have required the rate of soil clearing to increase by at least 750%. This means that credits are issued to farmers for not clearing land that would never have been cleared within that time frame.
A spokesman for the Emission Reduction Minister, Angus Taylor, said as chairman of the committee that Macintosh had reviewed and signed methods which he now claimed lacked integrity. “Is [he] now suggests that he gave inadequate advice to successive Commonwealth prime ministers?
The Emission Reduction Guarantee Committee was also contacted for comment.
Macintosh said he tried to resolve CO2 credit issues while in committee but had limited success, regretting that he had not taken a stronger stance on some issues. He said he had continued to try to persuade the regulator and other officials about the need to act before deciding to publish.
He served on the committee for more than six years before retiring when he was appointed one of three royal commissioners investigating Australia’s natural disaster response following the 2019-20 catastrophic forest fires. He continues to work for the Department of Agriculture on a program advocated by Agriculture Minister David Littleproud that rewards farmers who protect biodiversity while reducing emissions.
Credits central to net zero
Macintosh’s intervention is the strongest in what has become a growing call for a revision of how CO2 credits are issued, and of the Emission Reduction Fund.
A report by the Australian Conservation Foundation and the Australia Institute last year said that “avoided deforestation” projects – under which landowners are issued carbon credits for not removing vegetation from their land – were essentially “junk” as the areas in the most cases never went to be cleared. A study by Guardian Australia in 2018 found doubts about several other methods used to generate credits.
Macintosh said the analysis of him and his colleagues had two main implications.
“First, $ 1 billion in public money has been wasted. The Clean Energy Regulator was intended to buy emission reductions, but by and large it has not bought anything,” he said.
“Secondly, where these low-integrity credits are being used to compensate for pollutant emissions, it’s actually rising emissions … because we’re getting the increase in pollutant emissions, but there is no [genuine] offsetting.”
Carbon credits are central to the government’s plan to reach net zero emissions by 2050. The plan, which has been criticized for lack of detail or new policies, says up to 20% of the required reduction in emissions will come from carbon offsets.
To that end, the government plans to significantly expand the number of ways companies can earn carbon credits. It has approved a new method that enables companies with fossil fuels to generate credits using carbon capture and storage.
Taylor announced in January that credit generation would also be allowed through plantation forestry, emission reductions in industrial areas and the use of biomethane and “blue carbon” – storage of carbon in coastal wetland ecosystems.
The minister has taken two other steps in recent weeks to increase supply and trade in CO2 credits.
The first was to free up credit-creating companies from public contracts under the Emission Reduction Fund so that they can earn more in the private market, which triggered a sharp drop in the carbon price of polluting companies. The second was to lower the tax rate on the sale of CO2 credits to primary producers.